The slow rate of price decline in the United States in August forced the Federal Reserve to continue to take heavy medicine to fight inflation. At 2:00 a.m. Beijing/Hong Kong time on Thursday, the interest rate meeting ended and an interest rate hike was announced by 0.75%. The target range of the federal funds rate was raised to between 3 and 3.25%. ,In line with expectations.
However, the Fed’s interest rate dot plot shows that the federal funds rate is expected to be 4.4% by the end of this year, compared with 3.4% in June, which also means that the remaining two meetings this year will raise interest rates by a total of 1.25%.
The Fed noted strong growth in the U.S. job market and low unemployment, but inflation remained elevated, reflecting imbalances with the pandemic, high food and energy prices, and broader price pressures. Recent indicators point to moderate growth in consumer spending and business production.
It should be noted that the news has investors worried that the economy will deteriorate due to interest rate hikes.
In the foreign exchange market, after the Federal Reserve announced to raise interest rates by 0.75%, the US dollar index hit a 20-year high of 111.64 on Wednesday, and finally closed up 1.06% at 111.37.
EUR/USD closed down 1.32% at 0.9836. HSBC economists expect the euro to fall below this year’s lows against the dollar in the coming weeks. Meanwhile, sterling fell to a fresh 37-year low of $1.1234 and was last down 0.98% at $1.1268.
In addition, the dollar rose slightly against the yen, rising to a maximum of 144.70, and finally closed up 0.25% at 144.07. Traders remained cautious about pushing the dollar higher given the threat of Japan intervening to boost the yen. The Bank of Japan will announce its interest rate decision on September 22. IG Group predicts that it is expected to remain unchanged, focusing on whether there are foreign exchange intervention measures.
